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DCIT vs. R S Brothers Retail India Pvt Ltd. - (Income Tax Appellate Tribunal) (07 Mar 2023)

Employees' contribution to PF and ESI, if not remitted before the due date prescribed in the respective enactments, cannot be allowed as a deduction


Direct Taxation

The assessee is a company and filed its return of income declaring total income of Rs.36,49,56,410. The return of income was processed under Section 143(1) of Income Tax Act, 1961 by the CPC wherein an amount of Rs.2,86,15,909 was added being delayed remittances of Employees' contribution to PF & ESI. The CPC accordingly determined the total income of the assessee at Rs.39,35,72,320.

The CIT (A)-NFAC held that since the payments were made before the due date of filing of the return, therefore, no disallowance can be made. Aggrieved with such order of the CIT (A)-NFAC, the Revenue is in appeal before the Tribunal.

The CPC in the instance case processed the return of income under Section 143(1) by adding delayed payment of employees' contribution to PF & ESI of Rs.2,86,15,909 and determined the taxable income at Rs.39,35,72,320 as against the returned income of Rs.36,49,56,410. The learned CIT (A) NFAC deleted the addition on the ground that the assessee has remitted such amount of the Employees' contribution to PF & ESI before the due date of filing of the return. The issue stands decided against the assessee by the Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd vs. CIT where it has been held that the employees' contribution to PF & ESI, if not remitted before the due date prescribed in the respective enactments, cannot be allowed as a deduction. Therefore, the order of the learned CIT (A) NFAC to this extent is contrary to law as laid down by the Supreme Court and therefore, has to be reversed.

However, it is the submission of the learned Counsel for the assessee that while uploading the tax audit report, due to mistake, the date of payment was wrongly entered in due date column and the due date of remittance was wrongly entered in the date of payment column. Further, the actual amount of delayed payment according to him is only Rs.10,03,682 and not Rs.2,86,15,909 as added by the CPC. Present Tribunal restore the issue to the file of the CIT (A) NFAC with a direction to grant one opportunity to the assessee to substantiate its case by producing the relevant details of remittances and decide the issue in the light of the decision of the Supreme Court in the case of Checkmate Services (P) Ltd. Vs. CIT. Appeal filed by the Revenue is allowed.


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